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Australian Lawmaker Hits Broadband 'Deal'

By

Rachel Pannett

Updated Nov. 30, 2010 12:01 a.m. ET

CANBERRA, Australia—As Australian lawmakers on Monday gave final approval to legislation aimed at clearing the way for a national high-speed Internet network, an independent senator set up a potential roadblock by vowing to block access arrangements due for debate early next year.

The state-run fiber network, designed to offer Internet speeds of as much as one gigabit per second and advance Australia's communications infrastructure, cleared its biggest hurdle yet Friday when Senate lawmakers passed competition legislation designed to curb
Telstra Corp.'s
TLS 1.76%
domination of the market.

But on Monday, South Australian independent Senator Nick Xenophon said the new access arrangements allow for a "special deal" for Telstra.

"This taxpayer-funded enterprise needs to be a true level playing field to attract my support for the upcoming legislation," Mr. Xenophon said. "But right now there is scope within legislation that could see larger telcos being granted cheaper access than smaller players, and that is simply not acceptable."

The comments signal a challenge for Prime Minister Julia Gillard over the long summer recess in securing support for the access bills before Parliament resumes in February. Her minority Labor government needs the support of independents and minor-party lawmakers in both the lower and upper houses of Parliament to pass any new laws.

The network, valued at 35.7 billion Australian dollars (US$34.4 billion), was a key election issue for Ms. Gillard's Labor party. Her pledge to build the network played a pivotal role in winning the support needed to forge the minority government, after an August vote failed to deliver a clear result. But the fragile nature of an alliance among Labor and independent and minor-party lawmakers has exposed the planned fiber network to additional scrutiny at every step, slowing its progress.

A vote in the lower house on Monday on a number of amendments to the competition bill was a formality, with lawmakers supporting the minority Labor government all backing the bill.

The new competition law underpins an A$11 billion nonbinding deal reached with Telstra to help build the network. Under the law, Telstra will be required to split into separate retail and wholesale networks, preventing the company from giving its retail unit a better deal than rival operators that pay to use its network.

"Last week, I voted for the structural separation of Telstra because I believed it would increase competition and help consumers," Mr. Xenophon said in a written statement. "But allowing for preferential pricing on the national broadband network for certain companies will hurt competition and in turn hurt consumers. I will not be supporting those bills unless every provider gets the same deal, regardless of their size or power."

Australian Lawmaker Hits Broadband 'Deal'

CANBERRA, Australia—As Australian lawmakers on Monday gave final approval to legislation aimed at clearing the way for a national high-speed Internet network, an independent senator set up a potential roadblock by vowing to block access arrangements due for debate early next year.